Zulily Jumps 70% on First Day

Shares of Zulily, an online retailer of women’s and children’s clothing, jumped 70% in their first hours of trading Friday, a strong pop as the Seattle company tries to compete in a space crowded by Amazon and eBay.

Zulily Chief Executive Darrell Cavens

Zulily

Zulily has sheltered itself from having to compete with crosstown rival Amazon by focusing on merchandise from specialized vendors. The company sells items like charm bracelets and zebra-print pajamas primarily through short-term discounts, known as flash sales.

The company is growing rapidly. Revenue in the first nine months of the year more than doubled to $438.7 million, and the company reported a narrow $155,000 profit, according to recent regulatory filings. By contrast, Twitter, which had the year’s most hotly anticipated IPO last week, had $422.2 million in sales and lost $133.9 million over the same period. Its shares notched a 73% first-day gain.

Zulily debuted on the Nasdaq Stock Market under the zymbol ZU. The company Thursday settled on a $22 initial price, aiming to raise $140 million, after boosting the price range to between $18 and $20 from $16 to $18. In early-afternoon trading, shares changed hands around $37, giving Zulily a market capitalization of roughly $4.5 billion.

It was headed for one of the stronger e-commerce debuts this year. RetailMeNot, a coupon site, and ChannelAdvisor, an e-commerce strategy adviser, both jumped by about a third on their first days of trading.

“This shows that an e-commerce company with a strong, specific focus can be a success,” Chief Executive Darrell Cavens said in an interview. “It’s a good sign for others.”

Cavens said he’d use the funds to hire more workers and focus on new markets, such as so-called tweens, who are children not yet in their teenage years.

The flash-sales model could bolster initial public offering prospects for other buzzy e-commerce startups like Gilt Groupe and Wayfair, which has said it could release plans to go public as soon as late next year.

Starbucks Chief Executive Howard Schultz, an investor in Zulily through his venture capital firm Maveron, raked in about $58 million by selling 2.63 million shares — about 10% of his stake, based on the $22 offering price. Investors August Capital and Andreessen Horowitz each sold about 800,000 shares, netting them at least $17.6 million.

Mark Vadon, a co-founder of both Zulily and the jewelry website Blue Nile, is the single largest shareholder with a 30.3% stake. Cavens holds a 20.9% stake.